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Ice cream & frozen dessert manufacturers face losses as SMP prices double
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Thursday, 05 December, 2019, 08 : 00 AM [IST]
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Manjushree Naik, Mumbai
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Ice cream and frozen dessert manufacturers across the country, who are dependent on skimmed milk powder (SMP) as a key ingredient, are hit hard and face huge losses as the commodity has gone out of stock in the market resulting in steep hike in its price.
According to Rajesh Gandhi, president, Indian Ice Cream Manufacturers’ Association, and MD, Vadilal Industries Ltd, the price of SMP, which stood at Rs 160-180 kg last year, is currently available at Rs 325-350 per kg. It is feared that it may reach Rs 400-450 per kg soon and in spite of the sky-high cost, it may still not be available in the market.
Speaking to F&B News, Gandhi explained, “The prices have already doubled and they are likely to go up further, if the commodity is not made available through imports. While only NDDB can import SMP, duty to the tune of 60-70% will hit the imports rendering them unviable. Only SMP imported at zero per cent duty will work in the current scenario. At least, for a few months this has to be allowed.”
He adds, “That is because, small-scale manufacturers will not be able to buy the commodity if the prices hover around the current levels and the prices will not change if SMP is imported by paying a steep duty.”
Gandhi pointed out that the small-scale manufacturers were already affected by GST at 18% and also because the government is ensuring that every manufacturer is paying tax, unlike earlier, when tax evasion was common. For them, the SMP issue has come as another blow, according to him. Gandhi felt that ice cream, biscuits, sweets and all those industries, which were dependent on milk as an ingredient, would be faced with a crisis and may have to shut shop.
Other issues that we may face include default on loans, funds crunch, rise in unemployment and huge losses.
When questioned about the reasons for the shortage, Gandhi said, “These are cyclical issues. Last year, the government put an extra subsidy and allowed the additional powder to be exported. But this year, things have changed.”
Summary points of the current SMP scenario
• Last year average rate of SMP was Rs 150/kg.
• The average rate of last 4-5 years ranges between Rs 180 to Rs 200 / kg.
• This year from Jan-2019 onwards rates are increasing day by day from Rs 180 to
current rate of Rs 300/kg. • Current international rate of SMP is Rs 200/kg.
• When India decides to opt out of RCEP, rate of SMP got increased by Rs 20/kg in
India.
• After paying the current rate of Rs 300/kg in India, SMP is not available in the
market as per required quantity.
• When SMP is not available in this flush season what will be the situation on
availability of SMP in summer season?
• Also due to extended rainy season by two months in the country, there was great
damage to the crop and fodder, which resulted in the reduction of procurement by
10 to 15%.
• Import of milk powder, butter and butter oil are for captive consumption and
hence no farmers will be affected.
• There are lot of small /medium sized manufacturers who cannot afford the non-
availability of SMP and price hike.
• If current situation persists it will be very difficult for ice cream industry to sustain.
• Milk procurement is less by 10% in November 2019
• Hence milk shortage, no conservation in SMP
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Price list of SMP
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Cow
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Sr. No.
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Month
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2018
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2019
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1
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January
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170
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2
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February
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195
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3
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March
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200
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4
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April
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210
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5
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May
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230
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6
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June
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150
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245
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7
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July
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145
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255
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8
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August
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140
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265
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9
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September
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140
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280
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10
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October
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140
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290
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11
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November
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140
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305
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12
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December
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145
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Buffalo
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Sr. No.
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Month
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2018
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2019
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1
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January
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147
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200
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2
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February
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148
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220
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3
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March
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153
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230
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4
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April
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245
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5
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May
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250
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6
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June
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175
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260
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7
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July
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170
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275
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8
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August
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168
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Not quoted
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9
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September
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155
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10
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October
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150
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11
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November
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150
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12
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December
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160
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| Source : NCDFI - emarket
National Cooperative Dairy Federation of India Limited (NCDFI)
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